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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 24, 2007
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FAIR ISAAC CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-16439 94-1499887
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
901 Marquette Avenue, Suite 3200
Minneapolis, Minnesota 55402-3232
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-758-5200
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of
Certain Officers.
Item 9.01. Financial Statements and Exhibits.
Signature
Exhibit Index
Exhibit 99.1
i
Item 2.02. Results of Operations and Financial Condition.
On January 24, 2007, Fair Isaac Corporation (the "Company") reported its
financial results for the quarter ended December 31, 2006. See the Company's
press release dated January 24, 2007, which is furnished as Exhibit 99.1 hereto
and incorporated by reference in this Item 2.02.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of
Certain Officers.
(d) On January 24, 2007, Andrew Cecere resigned from the Board of Directors
of the Company and the committees on which he served in order to devote more
time in his new role at U.S. Bancorp. Mr. Cecere, who has been a board member
since April 2004, was recently named vice chairman and chief financial officer
of U.S. Bancorp, where he had previously served as vice chairman of wealth
management.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Description
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99.1 Press Release dated January 24, 2007
1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FAIR ISAAC CORPORATION
By /s/ Charles M. Osborne
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Charles M. Osborne
Interim Chief Executive Officer,
Vice President, Chief Financial Officer
Date: January 24, 2007
2
EXHIBIT INDEX
Exhibit No. Description Manner of Filing
- ----------- ----------- ----------------
99.1 Press Release dated January 24, 2007 Filed Electronically
Exhibit 99.1
Fair Isaac Announces First Quarter 2007 Results
Total revenue of $208.2 million;
Earnings per share of $0.52
MINNEAPOLIS--(BUSINESS WIRE)--Jan. 24, 2007--Fair Isaac
Corporation (NYSE:FIC), the leading provider of analytics and decision
technology, today announced the financial results for its first
quarter ended December 31, 2006.
First Quarter Fiscal 2007 Results
The company reported first quarter revenues of $208.2 million in
fiscal 2007 versus $202.8 million reported in the prior year period.
Net income for the first quarter of fiscal 2007 totaled $31.2 million,
or $0.52 per diluted share, versus $28.5 million, or $0.43 per diluted
share, reported in the prior year period. First quarter fiscal 2007
results included a $2.3 million tax benefit arising from adjustments
to income tax reserves resulting from the conclusion of a tax audit
and the extension of the Federal Research Tax Credit.
"We are pleased with our operating results, earnings per share,
and cash flows for the quarter, and appreciate the hard work of our
employees in good expense management," said Charles M. Osborne, Fair
Isaac's interim chief executive officer. "We are still not satisfied
with our rate of revenue growth. The expected benefits from our change
to the Integrated Client Network organization have been slower than
anticipated as people settle into new roles within the structure. We
remain steadfast that our vision provides long-term growth for our
customers, shareholders and employees."
First Quarter Fiscal 2007 Revenues Highlights
Revenues for first quarter fiscal 2007 across each of the
company's four operating segments were as follows:
-- Strategy Machine(R) Solutions revenues were $110.7 million in
the first quarter compared to $112.0 million in the prior year
quarter, or a decrease of 1.2%, primarily due to a decline
associated with mortgage, originations, and precision
marketing products offset by an increase in revenues from
fraud, customer management, and collections and recovery
solutions.
-- Scoring Solutions revenues were $44.9 million in the first
quarter compared to $46.2 million in the prior year quarter,
or a decrease of 2.7%, primarily due to a decrease in revenues
derived from our PreScore(R) Service.
-- Professional Services revenues increased to $38.4 million in
the first quarter from $32.8 million in the prior year
quarter, or by 17.0%, primarily due to an increase in revenues
from analytics, fraud, and customer management consulting
offset by a decline associated with collections and recovery
implementation solutions.
-- Analytic Software Tools revenues increased to $14.2 million in
the first quarter compared to $11.8 million in the prior year
quarter, or by 20.4%, due to an increase in revenues generated
from sales of the Blaze Advisor(TM) product.
Bookings Highlights
The bookings for the first quarter were $72.1 million versus
$127.8 million in the same period last year. The company defines a
"new booking" as estimated future contractual revenues, including
agreements with perpetual, multi-year and annual terms. Management
regards the volume of new bookings achieved as one indicator of future
revenues, but they are not comparable to, nor should they be
substituted for, an analysis of the company's revenues.
"Our lower level of bookings this quarter reflects our emphasis on
license and service sales," stated Mr. Osborne, "and these tend to
carry a lower booking value."
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents, and marketable security investments
were $271.7 million at December 31, 2006, as compared to $267.8
million at September 30, 2006. Significant changes in cash and cash
equivalents from September 30, 2006 include cash provided by
operations of $59.6 million, borrowings under the revolving credit
facility of $70.0 million, and $30.8 million received from the
exercise of stock options and stock issued under an employee stock
purchase plan. Cash used during the first quarter of fiscal 2007
includes $5.1 million related to purchases of property and equipment
and $154.5 million to repurchase common stock.
Outlook
The company expects revenues for second quarter fiscal 2007 of
approximately $215.0 million and earnings per diluted share to be
approximately $0.48. The company expects revenues for fiscal 2007 of
approximately $870.0 million and earnings per diluted share to be
approximately $2.15.
Organizational Announcement
The company also announced today that Andrew Cecere has stepped
down as a board member, effective immediately, in order to devote more
time to his new role at U.S. Bancorp. Mr. Cecere, who has been a board
member since April 2004, was recently named vice chairman and chief
financial officer of U.S. Bancorp, where he had previously served as
vice chairman of wealth management.
"I want to extend my thanks to Andy for his contributions to Fair
Isaac Corporation," said A. George Battle, chairman. "We are sorry to
see him go, but all of us at Fair Isaac wish him well in his new
position at U.S. Bancorp."
Company to Host Conference Call
The company will host a conference call today at 5:00 p.m. Eastern
Time (4:00 p.m. Central Time/2:00 p.m. Pacific Time) to discuss its
first quarter fiscal 2007 results, and outlook for fiscal 2007. The
call can be accessed live on the Investor Relations section of the
company's Web site at www.fairisaac.com, and a replay will be
available approximately two hours after the completion of the call
through February 21, 2007.
About Fair Isaac Corporation
Fair Isaac Corporation (NYSE:FIC) makes decisions smarter. The
company's solutions and technologies for Enterprise Decision
Management give businesses the power to automate more processes, and
apply more intelligence to every customer interaction. Through
increasing the precision, consistency and agility of their decisions,
Fair Isaac clients worldwide increase sales, build customer value, cut
fraud losses, manage credit risk, reduce operational costs, meet
changing compliance demands and enter new markets more profitably.
Founded in 1956, Fair Isaac powers hundreds of billions of decisions
each year in financial services, insurance, telecommunications,
retail, consumer branded goods, healthcare and the public sector. Fair
Isaac also helps millions of individuals manage their credit health
through the www.myfico.com website. Visit Fair Isaac online at
www.fairisaac.com.
Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements
contained in this news release that relate to Fair Isaac or its
business are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including the success of the Company's Enterprise Decision Management
strategy, its ability to recruit and retain key technical and
managerial personnel, the maintenance of its existing relationships
and ability to create new relationships with customers and key
alliance partners, its ability to continue to develop new and enhanced
products and services, competition, regulatory changes applicable to
the use of consumer credit and other data, the possibility that the
anticipated benefits of acquisitions, including expected synergies,
will not be realized and other risks described from time to time in
Fair Isaac's SEC reports, including its Annual Report on Form 10-K for
the year ended September 30, 2006. If any of these risks or
uncertainties materialize, Fair Isaac's results could differ
materially from its expectations. Fair Isaac disclaims any intent or
obligation to update these forward-looking statements.
Fair Isaac, FICO, myFICO, Blaze Advisor, Strategy Machine and
PreScore are trademarks or registered trademarks of Fair Isaac
Corporation in the United States and in other countries.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters Ended December 31, 2006 and 2005
(In thousands, except per share data)
(Unaudited)
Quarter Ended
December 31,
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2006 2005
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Revenues $208,227 $202,790
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Operating expenses:
Cost of revenues 70,569 67,045
Research and development 17,719 22,730
Selling, general and administrative 68,648 63,383
Amortization of intangible assets 6,390 6,263
Restructuring and acquisition-related - (674)
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Total operating expenses 163,326 158,747
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Operating income 44,901 44,043
Other income, net 435 845
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Income before income taxes 45,336 44,888
Provision for income taxes 14,111 16,431
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Net income $31,225 $28,457
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Earnings per share:
Basic $0.54 $0.44
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Diluted $0.52 $0.43
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Shares used in computing earnings per share:
Basic 58,057 64,211
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Diluted 59,985 66,219
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2006 and September 30, 2006
(In thousands)
(Unaudited)
December 31, September 30,
2006 2006
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ASSETS:
Current assets:
Cash and cash equivalents $99,149 $75,154
Marketable securities 122,812 152,141
Receivables, net 176,547 165,806
Prepaid expenses and other current
assets 16,680 20,209
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Total current assets 415,188 413,310
Marketable securities and investments 49,736 40,479
Property and equipment, net 54,650 56,611
Goodwill and intangible assets, net 786,535 786,062
Other noncurrent assets 22,061 24,743
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$1,328,170 $1,321,205
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other accrued
liabilities $56,610 $53,809
Senior convertible notes 400,000 400,000
Revolving credit agreement 70,000 -
Accrued compensation and employee
benefits 40,567 34,936
Deferred revenue 47,131 48,284
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Total current liabilities 614,308 537,029
Other noncurrent liabilities 14,166 14,148
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Total liabilities 628,474 551,177
Stockholders' equity 699,696 770,028
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$1,328,170 $1,321,205
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FAIR ISAAC CORPORATION
REVENUES BY SEGMENT
For the Quarters Ended December 31, 2006 and 2005
(In thousands)
(Unaudited)
Quarter Ended
December 31,
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2006 2005
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Strategy machine solutions $110,669 $111,986
Scoring solutions 44,918 46,156
Professional services 38,417 32,831
Analytic software tools 14,223 11,817
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Total revenues $208,227 $202,790
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters Ended December 31, 2006 and 2005
(In thousands)
(Unaudited)
Quarter Ended
December 31,
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2006 2005
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Cash flows from operating activities:
Net income $31,225 $28,457
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,549 12,059
Share-based compensation expense 9,572 9,514
Changes in operating assets and liabilities (3,732) 10,366
Other, net 9,034 348
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Net cash provided by operating activities 59,648 60,744
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Cash flows from investing activities:
Purchases of property and equipment (5,125) (2,545)
Net activity from marketable securities 21,392 22,587
Other, net (213) 249
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Net cash provided by investing activities 16,054 20,291
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Cash flows from financing activities:
Proceeds from revolving credit agreement 70,000 -
Proceeds from issuances of common stock 30,832 36,154
Repurchases of common stock (154,490) (12,766)
Other, net 634 2,352
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Net cash provided by (used in) financing
activities (53,024) 25,740
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Effect of exchange rate changes on cash 1,317 (359)
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Increase in cash and cash equivalents 23,995 106,416
Cash and cash equivalents, beginning of period 75,154 82,880
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Cash and cash equivalents, end of period $99,149 $189,296
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CONTACT: Fair Isaac Corporation
Investors & Analysts:
John D. Emerick, Jr., 800-213-5542
or
Marcy K. Winson, 800-213-5542
investorrelations@fairisaac.com